Web Hosts Face Payout As Jury Says They Should Have Known About Customers' Infringement

Two web hosting companies have been ordered to pay $32 million in damages after failing to convince a US jury that they were immune from responsibility for their users' actions.

Luxury goods maker Louis Vuitton brought a case against two Californian internet service providers (ISPs) run by Steven Chen, alleging that they were profiting from the sale of fake Louis Vuitton goods by businesses using the companies for web hosting.

Akanoc Solutions, Managed Solutions and Steven Chen were ordered to pay a total of $31.5m for trade mark infringement and $900,000 for copyright infringement after a jury found that they could have acted to stop the illegal activity but did not.

The jury found that the companies "should have known" that their services were being used by customers to sell goods which infringed Louis Vuitton's trade marks. "[The companies] had reasonable means to withdraw [their] services so that their services could not be used to directly infringe but [they] continued to provide [their] services to customers," said a statement agreed on by the jury.

The companies and Chen were accused of copyright infringement as well as trade mark infringement. The Digital Millenium Copyright Act (DMCA) contains specific provisions to protect service providers from having to check every one of the potentially millions of uses of their services which might infringe somebody's copyright.

The 'safe harbor' provisions mean that ISPs and other web hosts are not liable for users' copyright-infringing behaviour as long as they are ignorant of it. They are responsible once they have been told about infringement, though.

"Did [the companies] prove by a preponderance of evidence that they are service providers who acted in a manner that entitles [them] to the 'safe harbor' provisions of the Digital Millenium Copyright Act?" asked the document submitted by the jury. The jury said that neither of the two companies nor Chen had proved entitlement to the protections offered by the 'safe harbor' clause.

Louis Vuitton told news service Associated Press that it would ask the court, the US District Court for Northern California, to issue a permanent injunction banning the ISPs and Chen from hosting any web site that sells counterfeit goods.